NEV Taxi Market: Steady Government Support to Remain Crucial for Development Next Upcoming Years

NEV (New Energy Vehicle) taxi refers to a vehicle using unconventional vehicle fuels as a source of power, or a vehicle using conventional fuels with advanced automotive propulsion systems. Taxis in China travel around 450 kilometers on daily basis. Considering their high number and long working hours, introduction of new energy vehicle taxis in China offer an opportunity to limit fuel consumption and curb emissions.

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Government support in form of financial subsidies and tax incentives coupled with advancements in battery technology are the major factors driving this market. With rapid urbanization, the number of vehicles in China has grown considerably, resulting in increased air pollution, and fuel consumption. This has necessitated the central government in China to promote the use of new energy vehicles. In spite of these growth factors, absence of comprehensive charging infrastructures and high cost of batteries have collectively inhibited the growth of NEV taxis in China. However, their lies tremendous opportunity for growth of new energy vehicles in China, especially, in the field of V2G (Vehicle-to-Grid) and battery swapping technology. Moreover, use of REEVs (Range Extended Electric Vehicle) is an opportunity area, especially over the next few years till the Chinese market becomes mature enough to support mass production of BEVs (Battery Electric Vehicles).

In China, majority of NEV taxis are state-owned and are operated through taxi companies that receive support from the government. In 2012, company owned NEV taxis accounted for over 3/4th of the total NEV taxi market in China. With commuters preferring public vehicles over private taxis, the dominance by company-owned taxis is expected to continue over the forecast period from 2014 to 2020. In 2012, short range (80km – 150 km) NEV taxis accounted for the majority of market share. However, with advancements in battery technology, long range NEV taxis are expected to outnumber short-range NEV taxis over the forecast period from 2014 to 2020. Major industry participants include BYD Auto Co., Ltd., Anhui Jianghuai Automobile Co Ltd (JAC), Beijing Automotive Industry Holding Co., Ltd. (BAIC), Changan Automobile Co., Ltd, Beiqi Foton Motor Co., Ltd. and Dongfeng Nissan Passenger Vehicle Company among others.

Concerns about Air Quality Deterioration in China Fuel NEV Sales

A TMR analyst says, “Government support in the form of favorable policies is one of the major factors driving the growth of the NEV taxi market in China.” Increasing greenhouse gas emissions, depleting fossil fuels, and rising energy demand have necessitated the use of alternate energy sources to support the economic development in China. To address this, the Chinese government has been promoting the use of new energy vehicles and has set a target of five million electric cars to be on the roads by 2020.

Increased traffic congestion leading to deterioration in air quality is another factor fuelling the growth of this market. At present, several large cities in China such as Beijing, Shanghai, and Guangzhou are battling traffic congestion, which in turn, is affecting air quality due to increased energy consumption and CO2 emissions.

Increasing oil prices and need to safeguard energy security in the long run is also boosting the growth of China NEV taxi market. With increasing vehicle numbers in recent years, the rising fuel consumption poses a threat to China’s long-term energy security.

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High Cost of New Energy Vehicles Mars Adoption as Consumers Look for Alternatives

The lack of a comprehensive charging infrastructure is challenging the growth of this market. Despite advancements for vehicle electrification, inadequate and uneven distribution of charging stations are restraining the growth of this market. While some cities in China completely lack the infrastructure for supporting new energy vehicles, some other cities have excess infrastructure for the same.

The high cost of new energy vehicles and the cost and performance factor of components is also limiting the demand for these vehicles. Thus, the relatively high cost of NEVs in comparison to conventional vehicles is limiting the penetration of these vehicles in the price-sensitive Chinese market.

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This release was published on openPR.